For those of us who believe that taxing land rather than income or enterprise is a far better way to raise government revenues, today is a significant day.

The Liberal Democrats have proposed at their annual conference that properties worth over £1m would pay 0.5% of any of that value in excess of £1m on top of their existing council tax. A £2m house, for example, would pay an extra £5,000 a year in tax. This would affect only 1% of houses, they say, and would raise £1.25bn a year, allowing them to raise the income tax threshold to £10,000 and immediately take 300,000 low-paid people out of the income tax net.

It seems so obviously a good idea that the only question is, why it hasn't been done before?

Well, the Liberal party under Lloyd George did bring in a similar, though not identical, form of land value tax before the first world War, although it was short-lived. Now the Lib Dems are keen to position themselves to the left of the Tories – despite Nick Clegg at the weekend seeming to want to out-Tory the Tories on public spending cuts.

"The dividing line between us and George Osborne is that he wants to tax millionaires less and we want to tax them more," the Lib Dems' Lord Oakeshott said on Monday, referring to Conservative plans to raise the threshold for inheritance tax.

The Lib Dems think it is absurd that someone like Roman Abramovitch pays the same in council tax as an ordinary middle-class family – and they are right.

Oakeshott adds that this should be seen a "first step" towards shifting the balance of tax towards property or land, both of which are incredibly under-taxed in Britain relative to income. But even the this relatively modest proposal could start to remove some of the speculative element out of the top end of the housing market, with a possible ripple down to the rest of the market. If someone was planning to buy a £5m home, a £20,000 annual tax bill on it might make the house seem worth less than £5m in the buyer's eyes.

The other attraction of taxing property rather than income is that avoidance is much more difficult. The property is physically there – it can't be whisked away to some tax haven along with its billionaire owner.